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And so the unicorn died

The JSE has squashed plans to list Sagarmatha Technologies.

After initially approving the controversial listing of Sagarmatha Technologies, a collection of small e-commerce companies huddled together with 55% of Independent Media, the JSE has rescinded its approval.

According to the JSE this was because Sagarmatha had not submitted its annual financial statements to the Companies and Intellectual Property Commission (CIPC) at the time the pre-listing statement was approved by the JSE.

Thus it was in contravention of the Companies Act and JSE Listings Requirements, which the JSE was unaware of at the time.

The JSE added that Sagarmatha had not released its results for the 12-month period ending December 31 2017 by April 9, as required.

However Sagarmatha states that it was compliant with the CIPC by April 11, and had lodged its financials by this date. Its financial statements, which were included in the pre-listing statement (and thus were publicly available), were released on April 10, just a day after the deadline.

The company notes that it is disappointed that the JSE has decided that the listing cannot proceed on April 13 as planned, as a result of the above.

These events follow a week of intense media debate about the proposed listing, which was announced by Sagarmatha at the end of March. The company presented itself as a media and technology giant-in-the-making, not unlike a miniature Naspers or Facebook or Amazon. Aside from the loss-making Independent Media, its assets include e-commerce company Loot.com; a news agency, African News Agency; Video360, a video sharing site and app and some other small businesses. 

The intent was to raise R7.5 billion, based on a share price of R39, which values the company at an incredible R50 billion. This is more than Datatec, EOH and AdaptIT put together. This fantastic valuation is what inspired Sagarmatha praise singers to refer to the company as an ‘African Unicorn’. This is in reference to unicorns, US tech start-ups that are valued at over $1 billion. 

First to raise the alarm was Business Day’s Ann Crotty who noted in this article that the rush to raise capital via a listing could have something to do with the fact that Independent Media, which makes up the bulk of the new company, is heavily loss-making, with its liabilities far outstripping its assets and debt repayments coming due.

This critical article was followed by a damning analysis of the proposed listing written by investigative journalist Sam Sole, a take on the absurdity of the proposed listing by the Daily Maverick’s Ivo Vegter and a strongly worded opinion from Business Day which questions what responsibility the JSE has towards ensuring investors are not taken for a ride by companies that list on the exchange. 

Independent Media’s stable of newspapers and online platforms was galvanised to fight the good fight with articles appearing in Business Report, The Pretoria News and the Cape Times, among others, all heavily promoting the proposed listing.

It seems that it was workers’ funds that would make up the bulk of the R3 billion to be raised ahead of the listing. The South African Clothing and Textile Workers Union (Sactwu) planned to take up shares, while BBC Capital, the investment company of the Black Business Council, had agreed to buy six million shares valued at R240 million, among others. 

This is in addition to the Government Employees Pension Fund, which funded 80% of the original acquisition of Independent Media from the Irish-owned Independent Group in 2013 (20% direct stake as well as funding Iqbal Survé’s consortium, which owns 55%).

Where to from here for Independent Media and Sagarmatha Technologies remains to be seen.

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COMMENTS   26

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Iqbal Survé’s very easily caught public lie about about being Nelson Mandela’s personal doctor should be the very first warning to anyone thinking of doing business with him. No honour. No brains. No acumen.

How do I do 5 upvotes on this comment 🙂

Comment 5 times over! 🙂

Exactly. That is what happens when arrogance prevails with your JSE listing.

Surve regards Amazon and Facebook as miniatures. Is he aware that Amazon has a market cap of almost $3 trillion. He says Sagarmatha is an African giant in the making but is battling to raise R3 billion. His claims that the late Ahmed Kathrada was his mentor. Kathrada simply brushed it aside and said that he was nobody’s mentor and has never heard the name Surve before.

Amazon market is not $3 trillion or even close. It’s currently just under $700 billion.

Apple have been the closest company to come to $1 trillion market cap but it hasn’t been done yet. 2018 might be the year this happens and it will most likely be one of the FAANGs.

“it was in contravention of the Companies Act and JSE Listings Requirements, which the JSE was unaware of at the time”
Who gave the initial approval? What kind of person is in charge of the listings if he/she does not even know what the listing requirements are? Or was the listing announcement an other one of Survé’s BS story?

Shocking . One would think they would at least have a one page checklist that even an intern could tick off. Items like tax certificates and other compliance items

Unaware your own listing requirements was non compliant ? Very poor show JSE!

it is run by a moron and it was going to list on Friday the 13th on a crazy valuation. The public dodged a bullet.

BUT an interesting thing when one considers some similarities with Naspers (excl TenCent) : what would the valuation of Naspers be with its collection of media, publishing, ecommerce and overpaid maaitjies in head office? Same circus, different clowns

Huh? Even if you exclude Tencent and Mail.ru (another successfull investment) News24 – the old Naspers newspaper business – is not even 10% of the business.

“Overpaid maaitjies” never ceases to amaze me how Afrikaners love to pull each other down…

Well done Ann Crotty for doing what journalists should be doing – digging deeper than the surface to find the nitty gritty!

“Where to from here for Independent Media and Sagarmatha Technologies remains to be seen.”

Into the dustbin of failed companies run by deluded, arrogant people.

It would be nice/useful/important for someone to rescue The Cape Times. It cannot be worth more than R1?

At the moment this is a 10 page jumble of absolute sheet. Plus another chucked together foul up (c.u.f.u. really) of business sic, sport and whatever else.

While digital is growing a decent, informative newspaper imho definitely has a place. The Argus is not much better.

No race based AA or BBB-EE please……………it will be just another balls up.

This was Alice in Wonderland fantasy right from the start. To quote another saying “one cannot make a purse from a sow’s ear”.

The poor Government Employee Pension Fund is still being used as a personal bank for the politically connected. When will this end?

You know how little credibility Surve has when his own alma mater apparently had second thoughts of accepting a donation of R1 million for a computer centre at the school.As for Kriel,quite prepared to blow more workers monies into what would have been a bottomless pit,having squandered workers monies with some dodgy deals a few years back where Enoch Godongwana was involved.Mr Kriel,how much of your own money were you prepared to pit into this venture?A game changer of note,what a cliche.Time to leave Kriel.

No doubt this will be blamed on some imaginary WMC conspiracy…

Already the Black Business Council is doing so. They would have been one of the investors. I actually think they should let the listing go ahead, let politically motivated investors burn their fingers.

@Notwarren…thats exactly what I was thinking

That does sound good, but unfortunately the PIC/GEPF will sit with the mess, and as many of the GEPF employees receive defined benefit pensions, i.e regardless of market performance you get your money, the good old SA tax payer will have to bail them out again. All the while Surve would have turned his imaginary unicorn in R billions, shifted it to Dubai and give the finger to SA.

Would be a bit like listing Walter Mitty! Guptaesque!

Did anyone try and make a call to Jim Rogers to get his comment on this listing and the announcement he was going to put $100m into this venture?
I cannot believe that The Investment Biker would have agreed to this.

Something about the way they have valued Sagarmatha does not smell right. If is smell like a rat, there must be a rat about.

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